Kraft will chop number of packaging suppliers

Kraft Foods Inc. will soon begin efforts to cut its base of suppliers in half, according to a recent Reuters story. Included among the cuts will be packaging suppliers for a number of brands.

At the core of this effort is the consolidation of purchasing, in which Kraft will look for areas in which it can purchase packaging and other items centrally for the whole company to eliminate redundancy.

Kraft is looking at the plan as the next logical step, following several years of closing plants, selling brands, and shifting the money into marketing budgets.

"This is probably the first truly holistic view we've taken," Julia Brown, senior vice president of procurement at Kraft, told Reuters. "We're essentially taking a white sheet of paper and saying 'what is the right number of suppliers to support this particular category, who are they, what is the capability we need for now and in the future, and does the current supplier base have that.'”

Kraft is said to expect savings of more than $300 million per year with the move.

SOURCE: Reuters

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